The Business of Sino-Cuban Relations

NEW YORK, NY (KWR) July 22, 2012 - There is a delightful story about relations between the People's Republic of China and the government of Fidel Castro in Cuba. According to then Chinese ambassador, Wang Youping, on the evening of October 18th, 1964 at the close of the day, the embassy's reception clerk rushed to his office to inform him that Fidel Castro and Emilio Aragonés (a member of the Secretariat of the Cuban Communist Party) had stopped by. The ambassador met Castro, who smiled and told Wang: "Today is Sunday, and we would like to have Chinese food." Wang revealed in his memoirs that it was not unusual in the early to mid-1960s for Cuban leaders, such as Fidel, Raúl Castro and Che Guevara, to come to the Chinese embassy without warning to enjoy Chinese cuisine. In response, the Chinese kept their chefs on duty, with half-cooked dishes in case of a visit. Moreover, the Chinese government was to eventually send two cooks from the famous Beijing Quanjude Duck Restaurant to the Chinese embassy in Havana due to Fidel Castro's fondness for Beijing duck.

Sino-Cuban relations have come a long distance since Fidel's visits to Beijing's Havana embassy to eat duck. While Cuba has remained an economic throw-back to the Cold War ways of statist communism, China has emerged as one of the world's economic superpowers. China is still led by the communist party, but its economics are unmistakably market-oriented and its major trade partner and one of its most significant places to invest is the United States. Cuba does not have formal relations with the U.S. and its economy is less-than-robust. Indeed, Raúl Castro spent part of July seeking greater help from China and Vietnam. In Cuba, private enterprise has been discouraged; in China, millionaires have been allowed to join the communist party. China has thrived on expanding trade and opening up to foreign investment; Cuba has grudgingly and incrementally accepted trade and investment. In Cuba, periodic ventures using market economics were killed by Fidel Castro.

Despite their differences, China has become a significant long-term strategic partner for Cuba. China in the past several years has made a sustained drive in Latin America and the Caribbean, something pushed along by its need for natural resources and markets. Brazil, Colombia and Chile have all been major beneficiaries of this development. China has also been more active in the Caribbean, stepping up to build stadiums in the Bahamas and Dominica, a power plant and cricket stadium in Antigua and Barbuda and provide loans to Jamaica. China has also indicated an interest in constructing a new track and field stadium in Grenada. China's motives for its strategic arrangements in the Caribbean are economic as well as part of a desire to reduce the handful of states that still recognize Taiwan as the Republic of China. Beijing regards Taiwan as a rebellious province.

Cuba remains an older relationship, with the shared experience of authoritarian governments with a revolutionary past, partially based upon anti-U.S. policies. China, however, has pursued a more pragmatic path and its relations with the North American country are complicated, nuanced and generally cordial, as well as based on solid economic linkages. Cuba does provide China with a friendly base in the Caribbean. While the Caribbean country, with its eleven million people, does not offer a large and affluent market for Chinese goods, there is the possibility of oil in offshore areas where Chinese companies are involved in exploration efforts. Cuba also produces sugar and ferronickel and it needs help in infrastructure, transportation and energy.

From a Cuban standpoint, greater help from China could be coming at a critical time - Fidel Castro is passing from the picture and Havana's main regional ally, Hugo Chávez, could be dead within the year from cancer. Fidel's eventual death could result in a faster opening of the Cuban economy, something the regime, now under his brother Raúl, would rather have China benefit from than the U.S.

At the same time, Venezuela's promises to help Cuba further develop its refining capacity have been disappointing. If Chávez dies, Venezuela's political support for Cuba becomes questionable, especially if the opposition comes to power. Under this light, China increasingly looks like a better deal. Chávez promised in 2007 to help Cuba build or expand its refining capacity; China's state-owned China National Petroleum Corporation (CNPC) signed a deal in 2011 to upgrade Cuba's Cienfuegos refinery for $4.5 billion. Considering China's track record of usually following through with its promises, the development of the Cienfuegos refinery and offshore exploration would certainly anchor China in the Cuba that is slowly emerging from the Fidel Castro era.

Sino-Cuban relations are heading into a new phase, in which Chinese economic interests in the Caribbean island are likely to grow. For China, there are business reasons as well as geopolitical incentives. While the U.S. has sought to contain Chinese influence in the South China Sea, a region China regards as its own backyard, the buildup in economic interests in Cuba puts China as a more active influence in a region that the U.S. regards as its own backyard. Looking ahead, Cuba is likely to increasingly play the Chinese card as the mortality of its aging dictator and his Venezuelan protégé become more evident. In turn, the Chinese could well be developing a stronger thirst for rum, lime and coke (Cuba Libre). This could offer something to wash down Beijing duck, all the while reminding the United States that the geopolitical game of penetrating one's backyard is not a game limited to Washington.

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